Pandora could have some music licensing troubles come January 1st. After a court ruling Wednesday, a number of major music publishers will now be able to broker their own streaming deals with Pandora, rather than having their streaming rights handled in bulk by another company. If one of those big publishers chooses to do so, Pandora will either have to cut a new deal with it or miss out on including popular songs on its radio service.
Pandora may have to broker individual deals
Previously, Pandora had signed a major deal that would grant it access to the entire library of music covered by BMI, which handles licensing for a number of publishers. But beginning January 1st, BMI will start allowing publishers to pull their music out of its library when it comes to selling streaming rights.
It's likely little coincidence then that January 1st is the same day that Pandora's new contract with BMI starts, giving publishers that want to broker their own deals an opportunity to pull out. Pandora argued in court that publishers shouldn't be allowed to pull out because its deal with BMI grants streaming access to BMI's entire catalog, but the court ruled that by withdrawing streaming rights, those publishers were simply no longer included.
According to Billboard, Universal Music Publishing Group, BMG, and Kobalt have all announced their intention to withdraw from the deal. Whether they'll follow through is another question. Billboard notes that the publishers pushing for the ability to withdraw their streaming rights were largely interested in letting BMI handle deals with smaller services, while they would handle deals with larger services like Pandora, likely in the interest of earning more from them.
The impact depends on whether or not publishers pull out
But making and overseeing those deals takes resources, and Billboard reports that publishers won't be taking the decision to pull their streaming rights out of BMI's catalog lightly. Even if they choose to, their music will remain covered by all existing contracts — it would only be new contracts going forward, such as Pandora's, that won't include them.
A wave of withdrawals from BMI is certainly a scary thought for Pandora: it's already struggling with costs and having a smaller music library than many competitors. Unfortunately, BMI's new policy threatens to make both of those situations worse.